Dale Earnhardt Jr. will lose his $32 million sponsorship deal from the National Guard at the end of this year, along with IndyCar driver Graham Rahal. The National Guard is withdrawing the deals for Dale Earnhardt Jr. and IndyCar amid increased budgetary scrutiny.

ByStaff, Associated PressAugust 7, 2014

Dale Earnhardt Jr. poses with a broom in Victory Lane after winning the NASCAR Sprint Cup Series auto race at Pocono Raceway last week in Long Pond, Pa. The National Guard will not renew its sponsorship of Earnhardt and IndyCar driver Graham Rahal.

Charlotte, N.C. — The National Guard is ending its sponsorship of both NASCAR's most popular driver and one of the most recognizable names in IndyCar.

It's not clear when the guard is leaving motorsports. It said in a Wednesday statement on its web site that its contracts to sponsor Dale Earnhardt Jr. in NASCAR and Graham Rahal in IndyCar run through the end of the year. Typically, government contracts are reviewed annually.

But, Hendrick Motorsports said in a statement it has a contract with the guard through 2015.

Bobby Rahal, co-owner of Rahal Letterman Lanigan Racing, said he learned of the guard's decision on Wednesday. He called it disappointing news "given the significant incremental brand exposure we have worked to produce for the National Guard in our first season together, including various off-track marketing and advertising programs focused on supporting the mission set forth."

The guard said it spent $32 million on its NASCAR sponsorship and $12 million on its IndyCar sponsorship this year, and noted that "sports sponsorships have played an important role in helping the guard build strong brand awareness." But, the guard statement said its sponsorship contracts in NASCAR and IndyCar "are set to expire at the end of the current season," which contradicts the Hendrick claim.

"Significantly constrained resources and the likelihood of further reductions in the future call for more innovative and cost-effective ways of doing business," Maj. Gen. Judd H. Lyons, acting director of the Army National Guard, said in the statement.

Military funding has come under increased scrutiny in Congress. Sen. Claire McCaskill of Missouri has called the sponsorship "wasting a bunch of money on a very expensive sports sponsorship."

A spokesman for McCaskill noted Thursday the guard had followed the Army, Navy, Marine Corps, and Coast Guard in all ending motor sports sponsorships.

"Claire is a NASCAR fan, and loves the National Guard — but spending tens of millions of taxpayer dollars on a recruitment program that signed up zero recruits, and that has been abandoned by the other service branches as ineffective, just makes no sense," said spokesman John LaBombard.

The guard announcement comes just two weeks after Earnhardt and Rahal visited Indiana National Guard troops at Camp Atterbury.

The drivers' met with a brigade out of Evansville, recognized soldiers from the 713th Engineer Company, did a question and answer session before honoring soldiers from the 219th Battlefield Surveillance Brigade and Earnhardt even swore in six soldiers who recently committed six years to the National Guard.

The drivers both fired a Howitzer, detonated explosives and left the base in the Blackhawk helicopter in what was a moral builder for the guard.

But, a USA Today report earlier this year showed that data provided to the newspaper showed $26.5 million in NASCAR sponsorship in 2012 failed to land a single new soldier.

The guard said in its statement that motorsports is not the only marketing arena to suffer under reduced budgets.

"Since 2012, the Army Guard has reduced sports sponsorships from six — including professional fishing and motorcycle racing — to just the NASCAR and IndyCar sponsorships," the statement said. "In fiscal year 2015, the Army Guard's marketing budget is expected to be about half of what it was just three years ago in fiscal year 2012."

The guard has been with Earnhardt since 2008, when he joined Hendrick Motorsports. NASCAR's most popular driver has won three races this year — including Sunday at Pocono when the guard was on the No. 88 and his uniform as his primary sponsor — and is second in the Sprint Cup standings.

Rahal only landed the guard this season after a prolonged battle with Panther Racing, which had the sponsorship in IndyCar from 2008 through 2013. Although the sponsorship was originally awarded to RLL late last year, Panther owner John Barnes appealed and the review dragged on for months.

The Government Accountability Office eventually denied Panther's appeal and RLL said in February the guard would be the primary sponsor for Rahal's No. 15 Honda.

Panther Racing has since filed suit against RLL, IndyCar and Document Packaging Brokers, an Alabama-based company known as Docupak that is involved in administering the guard sponsorship agreements. Panther alleges it lost sponsorship valued at $17.2 million a year because of bid-rigging and other improprieties.

The National Guard's full statement on its sports marketing cuts is below:

After undergoing an intensive internal review, the Army National Guard is set to make changes to its sports sponsorship approach to recruitment marketing. These substantial changes include an end to its sponsorship of NASCAR driver Dale Earnhardt Jr. and Graham Rahal in the Indy Racing League (IRL).

"Significantly constrained resources and the likelihood of further reductions in the future call for more innovative and cost-effective ways of doing business," said Maj. Gen. Judd H. Lyons, acting director of the Army National Guard.

The Army Guard spent $32 million on its NASCAR sponsorship and $12 million on its IndyCar sponsorship for 2014. Future programs will rely on much smaller budgets.

And while sports sponsorships have played an important role in helping the Guard build strong brand awareness, existing Army National Guard sponsorship contracts with NASCAR and IRL are set to expire at the end of the current season, he said.

"We believe industry and open competition can help us identify effective and efficient solutions to help us meet our marketing and recruiting objectives within budget constraints," Lyons said.

Motorsports sponsorships served as a way to build greater awareness of the Army Guard as a whole.

"As part of a broad recruitment marketing strategy, motorsports partnerships—including NASCAR—played an important role in helping the National Guard build strong brand awareness and in turn helped us achieve extraordinary recruiting and end-strength objectives over the past decade," said Lt. Col. Christian Johnson, who heads Army Guard marketing.

"Our NASCAR sponsorship was principally a marketing program, intended primarily to build awareness of the National Guard as a career option" said Johnson. "The NASCAR sponsorship allowed the National Guard to leverage a 77 million fan base and the sport's most popular driver."

Despite reduced budgets, the Army National Guard needs to continue to recruit new people.

"Our accessions mission—the number of new members who need to join the Army Guard each year —is the second largest in the Department of Defense, second only to the active Army," Lyons said.

"To make best use of limited marketing dollars, future programs will have to sustain the Army National Guard brand with the American public, and also generate quality leads that will fill our ranks with the best Soldiers that America has to offer."

Motorsports sponsorships are not the only programs to be impacted by decreasing budgets. Since 2012, the Army Guard has reduced sports sponsorships from six—including professional fishing and motorcycle racing—to just the NASCAR and IndyCar sponsorships. In fiscal year 2015, the Army Guard's marketing budget is expected to be about half of what it was just three years ago in fiscal year 2012.

And as the Army Guard shifts its marketing strategy, one of the key elements behind those changes is maintaining fiscal responsibility.

"We share a common commitment to the American people to be good stewards of taxpayer dollars," Lyonssaid. "We will continue to assess and refine our programs to ensure we get the best return on investment."